Rockwell Collins: ‘Sequestration is a Major Setback'

Woodrow Bellamy III

Rockwell Collins anticipated sequestration by adjusting infrastructure and reducing operating costs for its fiscal year 2013 budget, but the Iowa-based aerospace and defense manufacturer is disappointed to see that the government was unable to avert the automatic spending, according to a statement released Friday.

After weeks of warning how negative the impact of the $85 billion in across-the-board federal spending cuts would be, the Obama administration was unable to formulate an alternative deficit reduction plan and so the cuts begin. The Department of Defense must reduce its 2013 budget by $40 billion before the end of the fiscal year, which will lead to reduced revenues and some tough decisions for many of the nation’s aerospace and defense contractors.

“The negative impact of sequestration is a major setback for the aerospace and defense industry, and the U.S. economy as a whole,” Rockwell Collins CEO Clay Jones said in a statement. “Fortunately, we saw this as a highly likely outcome and factored in the impacts of sequestration to our FY 2013 plan.”

Rockwell Collins assumed its government revenues would be reduced by 10 percent for the year, about half of which it attributes to the automatic spending cuts. The company is also planning to cut up to 350 jobs, though it will delay the firings until the impact on its military and commercial plans can be clearly defined.

That’s only for 2013. Sequestration imposed a total of $1 trillion in spending cuts to be split evenly between defense and non-defense discretionary federal programs over nine years, according to industry trade group Aerospace Industries Association (AIA). The $500 billion in cuts to defense spending from sequestration adds to the $487 billion in reduced defense spending already imposed by the Budget Control Act of 2011.

Although the cuts have already taken effect, Rockwell Collins is among several companies and organizations hoping that lawmakers will work with the White House to reverse the cuts and produce an alternative solution.

"At a time when jobs and economic growth are in short supply, we can ill afford to have Washington making it worse by failing to resolve this issue," Jones said. "Our national debt must be addressed but it would be hard to find a more irresponsible approach to it than sequestration. I urge our leaders in Washington to quickly remedy the damage that this legislation will bring to our economy and national defense." More